Oil prices ease as traders weigh escalating US-Iran conflict risks

Oil prices edged lower on Thursday as traders locked in profits after recent gains while continuing to monitor the escalating conflict between the United States and Iran.

Despite the decline, investors remained cautious as the worsening geopolitical situation continued to raise concerns over potential disruptions to global crude supplies, particularly through the Strait of Hormuz.

Brent crude futures slipped 24 cents, or 0.28%, to $84.95 a barrel after initially extending gains for a fourth consecutive session.

Although prices eased later in the day, the international benchmark remained close to a one-month high reached earlier in the session.

US West Texas Intermediate (WTI) crude also traded lower during the Asian session, falling more than 1% to trade just below the $79.00 mark.

However, the pullback showed limited bearish momentum, with the benchmark remaining near its highest level in over a month, recorded earlier this week.

Escalating US-Iran conflict supports crude prices

The latest movement in oil prices came amid a fresh escalation in hostilities between the United States and Iran.

The United States launched strikes on Iran's coastal defence systems and missile sites on Wednesday after reimposing a naval blockade of Iranian ports.

In response, Iran threatened to halt additional regional energy exports, describing the conflict as an existential war with the United States.

The confrontation has intensified since the beginning of the week, with US forces carrying out another wave of airstrikes targeting Iranian missile and drone infrastructure.

Tehran responded by launching retaliatory drone and missile attacks on US-linked military facilities across the region.

The escalating conflict has heightened concerns over potential supply disruptions, particularly if tensions continue to intensify around the Strait of Hormuz, a key route for global oil shipments.

Investors await fresh developments

Despite Thursday's decline, traders remained hesitant to establish aggressive bearish positions as geopolitical uncertainty continued to support crude prices.

Brent crude had climbed nearly $1 earlier in the session before reversing course, while both Brent and WTI continued to trade near their recent monthly highs, reflecting the market's cautious stance.

Investors appeared to be waiting for further developments in the Middle East before placing fresh directional bets.

Ongoing uncertainty surrounding the conflict has kept a geopolitical risk premium embedded in oil prices, even as traders booked profits following the recent rally.

As a result, market sentiment suggests that any meaningful correction in crude prices could attract renewed buying interest as participants continue to monitor the evolving geopolitical landscape.

For now, oil markets remain highly sensitive to developments in the Middle East, with traders closely watching events that could influence global energy supplies and determine the next direction for crude prices.